Monday, December 3, 2007

When you sell a property, your appointed agent MUST hold a signed mandate, that says you give them the power to advertise, visit and hopefully sell your property.

This is signed in duplicate, so that both parties can hold an original.

A MANDATEXCLUSIF says that they - and only they - can sell your property for you. They may enter into collaboration with other agencies who may have interested potential buyers, but it is your appointed agent who should be present for all visits and handle all legal paperwork eventuating in the sale.

A MANDATdeVENTE SANS EXCLUSIVITE can be given to as many agents as you wish.

PROS for EXCLUSIVEThe agent, knowing that he will get a commission regardless of whether you or another person/agent sells the property, will spend more time and money placing your property in magazines or other advertising mediums (a glossy magazine may cost several thousand Euros).

He will be more attentive to your needs, and steer clients more towards your property.

You only have to worry about 1 person holding keys or leaving instructions, or handing out sensitive information.

CONSThe agent may not have clients, or be absent for long periods.

You may find your own buyer (or a third party) but still have to pay a part of the commission.

Less competition may lead to less exposure or a limited market

Difficult sometimes to break the mandate

PROS for NON EXCLUSIVEAgents will be competing with each other to sell your property first

Usually, a quicker turnaround

Higher exposure

CONSAgents will spend less time, money and effort if there is too much competition

You may have plenty of strangers traipsing through your property

In both cases, there is usually a time limit for a mandate - 3 months for exclusive and 12 months non exclusive - but it is up to you to decide. Usually, at the bottom of the mandate, is a form to be returned by registered letter should you change your mind or no longer wish to use the agents services (it may have been sold by another agent).

In any case, if you sell for a price which is not the same as the mandat price, then either a new mandate must be drawn up (with the modified price) or an avenantde mandate has to be attached.

Some buyers choose to have their own MANDATE DE RECHERCHE drawn up - thus paying the agent directly and saving on notary fees.

If you are an EU National, this would be 16% ( 36,800 € in this instance)

If you are French - 26% (59,800 €)

Anyone else (or a business or company) then you pay 33% on the profit ( 75,900 €)

HOWEVER - after 5 years ownership, the CGT starts to decrease, and is 0% after 15 years - i.e. you've had a secondary residence for 15 years or more, and now want to sell - you pay no CGT.

You might choose to decrease your notary fees (roughly 7%) when you bought by having furnishings, kitchens etc listed and paid separately (thus not included in the notaires fees) - however, when you sell your profit margin will be higher (unless you repeat the process of this separate 'inventory') and thus paying more CGT.

For the sale, the notaire will automatically appoint a CGT specialist, who roughly charge 0.65% of the sale price. It is up to you to provide for them any legal work or justification of why they should diminish your profit margin from any advancements (and thus costs) associated with your property.

Many of my buyers are standing off for the moment, to the dismay of sellers and agents alike.

Although there are strong global ties to similar circumstances in the US for example, it is difficult to name one factor, and often the reasons are false or the buyers have been mislead.

Some key points include:

A strong Euro currency

High interest rates

Ridiculous prices on the Riviera

Increasing interest rates

A glut of properties in general

A scarcity of decent properties

An impression that 'the bubble will burst'

This last point warrants a closer look, especially since the Riviera has its own micro - economy.

Similar to Florida, the Riviera is a haven for sunwoshippers, retirees, the wealthy, conventions and the nautical crowd....just to name a handful of its diverse community.

Whilst most of France may be descending in value or price, the Riviera holds its value well - little constructable land available, a high demand, excellent transportation and security.

Imagine you have just retired in Europe. Most will settle and live where they lived or worked.

Some will have a disposable income, perhaps travel for a year, then settle.

Some will have assets, perhaps a secondary residence in their capital or a holiday home nearby.

Those with a larger pension plan may have opted for the South of Spain, Portugal, Greece - where the climate and lifestyles are agreeable, but where the infrastructure is wanting in many facets.

And for those with the best choice financially, they will choose the South of France for its diverse activities, quality of life, access etal.

Thus already we can see one small community who will not be diminishing their purchasing power on the Riviera in the immediate future.

As their demand on criteria, access and location are often exact and limited, they will purchase what is available, often at the price asked - or risk waiting several years for another opportunity to arrive.